Malaysia’s National Energy Efficiency Policy and Action Plan 2026-2035 (NEEAP 2.0) and Energy Efficiency and Conservation Act (EECA) could unlock an estimated MYR 9.1 billion ($2.23 billion) in private-sector investment in industrial and commercial energy-efficiency measures, although much of the projected MYR 36.6 billion spending remains dependent on project economics, financing, incentives and enforcement, MBSB Research said Wednesday.
According to the research house, the NEEAP 2.0 together with the EECA creates a regulatory framework to systematically reduce the amount of energy required by factories, buildings and households.
“Of the headline MYR 36.60 billion figure, we believe the opportunities are concentrated in the estimated MYR 9.1 billion of industrial and commercial private investment, spanning industrial utilities, high-efficiency motors, automation, heating, ventilation, and air conditioning (HVAC)/chillers, heat recovery, mechanical and electrical (M&E) retrofits and district cooling, while the much larger MYR 26.9 billion domestic component reflects the adoption of higher-efficiency appliances,” it said.
According to MBSB, the energy-saving measures (ESMs) in NEEAP 2.0 are generally not blanket mandates but it is supported by the EECA, which mandates energy management, reporting and audits for major energy consumers and imposes minimum energy-performance requirements on designated buildings.
For noncompliant buildings, the Energy Commission can require an improvement plan to be implemented, providing a regulatory pathway through which recommended efficiency measures can translate into actual capital expenditure (capex).
For instance, large industrial or commercial energy consumers using ≥21,600GJ over 12 consecutive months are required under the EECA requires to appoint a Registered Energy Manager (REM), establish and implement an Energy Management System (EnMS), submit annual reports and conduct periodic energy audits.
The annual Energy Efficiency and Conservation (EE&C) report must disclose both the measures proposed to improve efficiency and measures that have been implemented or remain unimplemented. Failure to appoint an Registered Energy Manager (REM) and to establish an EnMS could result in fines of up to MYR 50,000.
While NEEAP 2.0 provides a comprehensive blueprint for reducing Malaysia’s energy intensity, MBSB said much of the projected spending remains indicative rather than committed, with private-sector investment accounting for 98.5 percent of the total and most of the ESMs not subject to blanket mandatory implementation.
“We view that achievement of the plan’s savings targets remains dependent on project economics, corporate willingness to invest, availability of financing and the effectiveness of future incentives and enforcement,
“The bulk of the investments are linked to the domestic sector which will mainly involve household appliance replacement, which we view as voluntary,” said the research house.
Overall, it viewed the NEEAP 2.0 not a policy to reduce electricity demand but a plan to moderate future demand growth.
For solar engineering, procurement, construction, and commissioning (EPCC0 players, it sees them potentially benefit from cross-selling energy efficiency/management solutions alongside solar and battery energy storage system (BESS).
Mechanical, electrical and process utilities (MEP) contractors may benefit from retrofit and
upgrade works, it noted.
It sees many of the industrial and commercial ESMs require physical modification of existing mechanical and electrical systems, including high-efficiency chillers, pumps, cooling towers, airside and waterside systems, building automation, lighting, motors, compressed-air systems, steam and hot-water utilities, as well as recommissioning and retro-commissioning works.
“If the MYR 26.9 billion investment in the domestic sector eventually materializes, this will be positive for certain consumer stocks as lower-efficiency products are progressively replaced by more compliant models,” it added.
The Ministry of Energy Transition and Water Transformation (PETRA) launched the NEEAP 2.0 on Tuesday, marking the next phase of Malaysia’s energy transition by shifting part of the focus from building more energy supply towards using existing energy more efficiently.
It is noted that NEEAP 1.0 focused mainly on electricity and was constrained by the lack of a comprehensive mandatory framework.
NEEAP 2.0 now covers both electrical and thermal energy and is anchored by the EECA 2024, which came into force in January 2025. This gives the Energy Commission statutory powers to obtain data, monitor compliance and enforce energy-efficiency requirements.
The headline target is an 11.6 percent reduction in energy demand against business as usual (BAU) by 2035.
This means Malaysia is not targeting an absolute 11.6 percent decline in energy consumption but rather consumption in 2035 should be 11.6 percent lower than it otherwise would have been.
BAU energy demand for the industrial, commercial and domestic sectors is projected at 1.466m TJ in 2035. After the projected savings, 2035 demand would be around 1.296m TJ, slightly higher than 1.238m TJ in 2026.
NEEAP 2.0 projects cumulative savings over 2026 – 2035 to amount to 815,382TJ, equivalent to MYR 85.2 billion of energy savings.
The industry sector is where most of the actual energy savings will come from. Around 69 percent of cumulative savings are expected from industry, versus 21 percent from commercial buildings and 10 percent from households.
The commercial sector has the highest 2035 percentage reduction target at 13.2 percent, versus 11.9 percent for industry and 8.7 percent for domestic.
The total investment over the decade is estimated at MYR 36.6 billion, but only MYR 560 million comes from public funding.
NEEAP 2.0 expects some MYR 36.04 billion, or 98.5 percent of the amount to come from the private sector.
“We note that the bulk of the private investment is attributed to the domestic sector at MYR 26.9 billion, which are largely associated with the adoption or replacement of more energy-efficient appliances. Industry represents MYR 7.11 billion and commercial buildings MYR 2.03 billion,” said MBSB.
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